Regional policy in 2005: remarkable
progress, but stark disparities remain in the modern infrastructure needed to
generate growth and jobs

Danuta Hübner, Commissioner for Regional Policy, today presented
the Fourth progress report on cohesion, which provides a snapshot of economic
and social disparities in the EU and reviews progress over the past year in
tackling them. Among the highlights of the year: the reform of EU regional
policy, excellent progress in preparing the new regional programmes due to start
in 2007, and a growing recognition that helping less prosperous regions to catch
up on a sustainable basis is key to increasing competitiveness. However, the
report also shows that much remains to be done, in particular to narrow severe
regional disparities in modern infrastructure and innovative capacity. Regional
policy will therefore continue to play a vital role in improving Europe’s
economic prospects.

Commissioner Hübner said, "Europe needs growth from below, and all
regions must contribute if we are to succeed in boosting competitiveness and
employment in the EU as a whole. But today’s report reveals worrying
disparities in modern infrastructure, research and education which limit our
capacity for excellence and innovation. Regional policy will continue to play a
vital role over the next decade in closing these gaps and helping the European
economy to fulfil its true potential.”

The Fourth progress report on cohesion shows that economic and social
disparities in the EU are narrowing, with rapid and sustained growth in the
least prosperous Member States. However, at the regional level, there remains
enormous unexploited potential: the 10 per cent of the population living in the
poorest regions in the EU account for a mere 1.5 per cent of gross domestic
product (GDP). The report also documents extensive gaps in modern
infrastructure, which regions will need to close if they are to catch up on a
permanent basis. For example:

in 47 out of 254 regions, there is hardly any research and development, with
expenditure on R&D below 0.5 per cent of GDP, compared to an EU-wide target
of 3 per cent;

in regions where GDP is below 75 per cent of the EU average, less than 15
per cent of households have broadband internet access, compared to around 30 per
cent of households in other regions.

The progress report also shows
that 2005 was a record year for cohesion policy in terms of resources invested,
with a total of EUR 38.3 billion committed under the European Regional
Development Fund, the European Social Fund, the Cohesion Fund, and the
pre-accession fund designated for candidate countries (ISPA). It also shows
that, in terms of execution, the new Member States’ experience since 2004
has been similar to that of the old Member States in the start-up phase of the
2000-2006 programming period.

Although much remains to be done, Commissioner Hübner said that 2005 had
been a remarkable year for cohesion. Among the achievements:

essential steps in reforming EU regional policy, and Member States’
agreement on a budget of EUR 308 billion for the policy in the new 2007-2013
programming period;

an intensive dialogue with regional authorities during 2005, helping to
bring them fully on board;

the formal establishment of regional policy as an instrument of the Lisbon
agenda for growth and jobs; and

the successful preparation by new Member States, as well as Bulgaria and
Romania, for substantially increased regional support as of 2007.

In
addition, the development of three new initiatives – JASPERS (technical
assistance for the preparation of major projects), JEREMIE (access to finance
for micro, small and medium-sized enterprises) and JESSICA (innovative finance
for urban renewal) – heralds a cultural shift in EU regional policy (see
IP/06/693).
The unprecedented cooperation with international financial institutions
(including the European Investment Bank, the European Bank for Reconstruction
and Development, the Council of Europe Development Bank and the European
Investment Fund) will bring greater technical and financial expertise to
regional programmes while increasing the financial leverage of the Community
budget.

Turning to the future, Commissioner Hübner said that the current
economic recovery should lead to broadly based growth and to the take-up of
spare capacity in regions that are currently under-performing. But in order to
maximise the contribution of regional policy to this process, it is essential
for regions to be well-prepared for the start of the new programmes in January
next year. National and regional authorities must reinforce expectations that
the available resources will be wisely and strategically invested.

At EU level, the legal regulations underpinning cohesion policy are expected
to be finalised in July following a second reading in the European Parliament.
This will pave the way for the adoption of the Community Strategic Guidelines
for cohesion policy, and it is expected that regional financial allocations for
2007-2013 will be announced before the summer break.The full text of the
fourth progress report on cohesion is available at: